Settlement Reached in Qmedtrix Lawsuit

A settlement has reportedly been reached in a lawsuit between Portland-based Qmedtrix Systems Inc. and ADP Inc.

A federal court jury previously had found in favor of Qmedtrix on its claim for damages, awarding more than $245,000. The terms of the settlement are confidential, but the lawsuit was dismissed before a judgment was entered with respect to the jury verdict.

Qmedtrix had alleged that it had been damaged by being supplied with a faulty database of medical state fee schedules. The federal court reportedly jury agreed.

ADP Context and an affiliated ADP company, ADP Leasing, started the lawsuit when Qmedtrix refused to pay the contract balance on the product. According to evidence at the trial, Qmedtrix had said that it would not pay for a faulty product that ADP could reportedly not fix.

In response to the ADP lawsuit, Qmedtrix filed and prevailed on counterclaims for breach of express warranty, breach of contract and indemnity in a jury trial that concluded Jan. 23, 2004. The jury awarded $245,023.89 damages for breach of license agreement obligations by one of the ADP companies, ADP Context. The jury also indemnified Qmedtrix from the amount remaining on its contract with ADP Leasing, the ADP company which had financed the purchase.

“The jury recognized that ADP Context breached its contract by providing inaccurate data and not correcting it when notified,” said Eric Neiman, of Williams, Kastner & Gibbs PLLC, attorney for Qmedtrix.

While post-trial issues were under consideration by the trial judge, the parties agreed to settle. “Our position was vindicated by the jury’s verdict,” said Qmedtrix CEO and founder Merrit Quarum, M.D.

ADP Context supplied Qmedtrix with workers’ compensation fee schedules from 50 states. Qmedtrix, which develops decision software and systems for medical bill review, uses state fee schedules as one of the fundamental components of bill adjudication for customers nationwide.

According to evidence at the trial, when ADP Context’s data reportedly proved faulty during extensive quality testing by Qmedtrix, ADP Context denied there was a problem and reportedly refused to make corrections. Ultimately, Qmedtrix rejected the database and declined to make further payments. When ADP took the matter to federal court, Qmedtrix countersued.

“We made the decision to go to court as a matter of principle,” said Quarum. “Fortunately, our pre-testing showed that the data was faulty before it was incorporated into our own system.”

The amount of damages awarded to Qmedtrix reflected the cost incurred to develop and staff a new in-house fee schedule department to create the database Qmedtrix anticipated receiving from ADP Context.